McCormick Announces Strong Finish to Fiscal Year 2011 and Outlook for Growth in 2012
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In the fourth quarter, the Company grew sales 13% and reported
earnings per share of
$0.98 , which included a$0.05 per share unfavorable impact from transaction costs related to the completion of the Kamis acquisition and Kohinoor joint venture. -
For the 2011 fiscal year, earnings per share rose to
$2.79 led by double-digit sales growth. -
In fiscal 2012, the Company is projecting another year of strong
sales growth and earnings per share of
$3.01 to $3.06 .
“At McCormick, 2011 was a year of significant accomplishment. We
completed three acquisitions, and the integration of these businesses
has gone well. These acquisitions are accelerating our sales and profit
growth and have expanded our presence in emerging markets and across
several growth platforms. In 2012 we expect at least 13% of sales to
come from emerging markets, up from 6% in 2006. Innovation is another
key avenue of growth and new products launched in the past three years
added 9% to sales in 2011. Cost savings in 2011 from our Comprehensive
Continuous Improvement program - CCI - totaled
“Consumers around the world continue to demand great taste, and we are
meeting this demand with our passion for flavor, innovative new
products, in-store merchandising and creative meal ideas. Our outlook is
for solid profit growth in 2012 driven by higher sales and further cost
savings. We expect the weak economy and volatile material costs to
persist, and we intend to continue adapting our pricing actions and
marketing programs. We also plan to offset a portion of increased costs
and fuel higher brand marketing support with our CCI cost savings and
have set a goal to achieve at least
Fiscal Year 2011 Results
The Company grew sales 11% in 2011 with a 5% increase in pricing, 4% from higher volume and product mix, and favorable foreign currency exchange rates that added 2%. Approximately half of the increase in volume and product mix was driven by acquisitions, and half by sales of new products, distribution gains and increased brand marketing support. The Company took price increases during the year in response to a double-digit increase in material costs.
Operating income rose 6% to
Earnings per share for the fiscal year was
The Company reported
Fourth Quarter Results for Fiscal Year 2011
In the fourth quarter, the Company achieved 13% sales growth. Pricing actions added 6% to sales and favorable foreign currency exchange rates added 1%. Volume and product mix grew 6% with 5% driven by acquisitions. New products, distribution gains and increased brand marketing support also grew volume and product mix. These increases were offset in part by a shift in sales that was due to retailer purchases in advance of pricing actions, which lowered sales volume by approximately 2% in the fourth quarter of 2011 compared to the year ago period.
Operating income rose
Earnings per share for the fourth quarter of 2011 was
Financial Outlook for Fiscal Year 2012
A difficult global economy and volatility in material costs are expected to persist in 2012. Despite this challenging environment, the Company expects to grow sales, generate CCI cost savings, invest in brand marketing support and deliver solid profit growth.
Sales are projected to grow 9% to 11% in local currency. Based on
current rates, the Company estimates a 2% reduction in sales from the
impact of foreign currency exchange rates. Included in the 9% to 11%
sales growth range is an expected 4% increase from acquisitions
completed in 2011 and the favorable impact of pricing actions. While
higher prices may impact sales volume in 2012, the Company plans to
offset this by driving volume with new products, increased brand
marketing support and expanded distribution. Material costs are
projected to rise at a high single digit rate in 2012. In addition to
pricing actions, the Company expects to offset a portion of this
increase with CCI cost savings and has set a target to achieve at least
Earnings per share are expected to be in a range of
While 2012 earnings per share for the fiscal year are expected to grow
8% to 10%, earnings per share in the first quarter of 2012 are expected
to be
In 2012, the Company expects to increase net cash provided from operations as a result of higher income and a reduction in inventory.
Business Segment Fourth Quarter Results for Fiscal Year 2011 |
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Consumer Business |
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(in millions) |
Three Months Ended |
Twelve Months Ended |
||||||
11/30/11 |
11/30/10 |
11/30/11 |
11/30/10 | |||||
Net sales |
$724.7 |
$638.7 |
$2,199.9 |
$1,999.0 | ||||
Operating income |
164.1 |
158.7 |
428.4 |
402.4 | ||||
Consumer business sales rose 13% from the fourth quarter of 2010. In local currency, sales grew 12% due to favorable pricing, and favorable volume and product mix, which includes the impact of acquisitions.
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Consumer sales in the
Americas rose 7% due primarily to pricing. During the fourth quarter, the Company took pricing actions in this region to offset the impact of material cost increases. Sales from Kitchen Basics, acquired inJuly 2011 , added 3% to volume and product mix, along with a 1% increase from sales of new products and from the impact of incremental brand marketing support. These increases in volume and product mix were offset by the unfavorable impact of customer purchases in advance of pricing actions that caused sales to shift between quarters and lowered volume and product mix by 4% in the fourth quarter. Also, sales of certain items were affected by the impact of higher prices this period. -
Consumer sales in EMEA (
Europe ,Middle East andAfrica ) increased 36% and in local currency rose 32%. Favorable volume and product mix was the primary driver of this increase with sales from Kamis adding 26% to fourth quarter sales growth. WhileMcCormick continues to face a challenging environment in this region, it was able to selectively raise prices, which added 6% to fourth quarter sales. -
Fourth quarter sales in the
Asia/Pacific region rose 36% and in local currency grew 29%. Favorable volume and product mix was the primary driver of this increase with sales from Kohinoor, a majority-owned joint venture, adding 33% to sales growth. In the fourth quarter, pricing actions added 4% to sales in theAsia/Pacific region.
For the fourth quarter, operating income for the consumer business rose
Industrial Business |
||||||||
(in millions) |
Three Months Ended |
Twelve Months Ended |
||||||
11/30/11 |
11/30/10 |
11/30/11 |
11/30/10 | |||||
Net sales |
$386.0 |
$340.8 |
$1,497.7 |
$1,337.8 | ||||
Operating income |
27.9 |
26.7 |
111.9 |
107.4 | ||||
Industrial business sales rose 13% from the fourth quarter of 2010 as a result of favorable volume and product mix, as well as pricing actions. The impact of foreign currency exchange rates was minimal.
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Industrial sales in the
Americas rose 11% with about 60% of the increase from pricing actions and 40% from higher volume and product mix.McCormick achieved strong growth in sales of snack seasonings, ingredients and other products sold to food manufacturers. A number of the new items developed feature all natural ingredients, reduced sodium and reduced calories for which there continues to be high demand. Demand in certain sectors of the foodservice industry remained weak, although sales rose this period primarily as a result of pricing actions. -
In EMEA, industrial sales rose 12%, and in local currency increased
13%. Demand from quick service restaurants remained strong in this
region for products supplied from operations in the
U.K. ,Turkey andSouth Africa . Sales of snack seasonings were also strong this period. The impact from pricing actions was minimal in the fourth quarter of 2011. -
In the
Asia/Pacific region, sales rose 29% and in local currency grew 22%. Higher volume and product mix drove the majority of this growth with pricing actions adding about a quarter of the increase. As a leading supplier,McCormick is supporting the expansion of quick service restaurants in this region and accelerating this growth with the development of innovative new products.
Industrial business operating income rose 5% to
Non-GAAP Financial Measures
The non-GAAP information in this press release is not a measure that is defined in generally accepted accounting principles (“GAAP”). The non-GAAP information in this press release excludes the reversal of a significant tax accrual recorded in the third quarter of 2010. Management believes the non-GAAP information is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our on-going operations and analyze the Company’s business performance and trends. Management believes the non-GAAP measures provide a more consistent basis for assessing the Company’s performance than the closest GAAP equivalent. Management, therefore, uses the non-GAAP information alongside the most directly comparable GAAP measures in this press release.
Reconciliation of GAAP to non-GAAP Financial Measures
The Company has provided below certain non-GAAP financial results for fiscal year 2010 excluding amounts related to the reversal of a significant tax accrual recorded in the third quarter of 2010.
(in millions except per share data) |
Twelve Months Ended |
|||||
11/30/11 |
11/30/10 | |||||
Net income |
$374.2 |
$370.2 | ||||
Reversal of significant tax accrual |
- |
(13.9 | ) | |||
Adjusted net income |
$374.2 |
$356.3 | ||||
% increase versus prior period |
5.0 |
% |
||||
Earnings per share - diluted |
$2.79 |
$2.75 | ||||
Reversal of significant tax accrual |
- |
(.10 | ) | |||
Adjusted earnings per share – diluted |
$2.79 |
$2.65 | ||||
% increase versus prior period |
5.3 |
% |
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As previously announced,
Forward-looking Information
Certain information contained in this release, including statements concerning expected performance such as those relating to net sales, earnings, cost savings, acquisitions and brand marketing support, are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as “may,” “will,” “expect,” “anticipate,” “believe” and “plan.”
These and other forward-looking statements are based on management’s
current views and assumptions and involve risks and uncertainties that
could significantly affect expected results. Results may be materially
affected by external factors such as damage to our reputation or brand
name, business interruptions due to natural disasters or similar
unexpected events, actions of competitors, customer relationships and
financial condition, the ability to achieve expected cost savings and
margin improvements, the successful acquisition and integration of new
businesses, fluctuations in the cost and availability of raw and
packaging materials, changes in regulatory requirements, and global
economic conditions generally which would include the availability of
financing, interest, inflation rates and investment return on retirement
plan assets, as well as foreign currency fluctuations and other risks
described in the Company’s filings with the
Actual results could differ materially from those projected in the forward-looking statements. The Company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise.
About
Every day, no matter where or what you eat, you can enjoy food flavored
by
To learn more please visit us at www.mccormickcorporation.com.
Fourth Quarter Report | McCormick & Company, Incorporated | |||||||||||||||
Consolidated Income Statement | ||||||||||||||||
(In millions except per-share data; for periods ending November 30) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales | $ | 1,110.7 | $ | 979.5 | $ | 3,697.6 | $ | 3,336.8 | ||||||||
Cost of goods sold | 631.6 | 533.5 | 2,175.1 | 1,919.1 | ||||||||||||
Gross profit | 479.1 | 446.0 | 1,522.5 | 1,417.7 | ||||||||||||
Gross profit margin | 43.1 | % | 45.5 | % | 41.2 | % | 42.5 | % | ||||||||
Selling, general and administrative expense | 287.1 | 260.6 | 982.2 | 907.9 | ||||||||||||
Operating income | 192.0 | 185.4 | 540.3 | 509.8 | ||||||||||||
Interest expense | 13.6 | 12.3 | 51.2 | 49.3 | ||||||||||||
Other income (expense), net | (0.1 | ) | 1.2 | 2.3 | 2.2 | |||||||||||
Income from consolidated operations before income taxes | 178.3 | 174.3 | 491.4 | 462.7 | ||||||||||||
Income taxes | 51.1 | 46.6 | 142.6 | 118.0 | ||||||||||||
Net income from consolidated operations | 127.2 | 127.7 | 348.8 | 344.7 | ||||||||||||
Income from unconsolidated operations | 4.5 | 5.9 | 25.4 | 25.5 | ||||||||||||
Net income | $ | 131.7 | $ | 133.6 | $ | 374.2 | $ | 370.2 | ||||||||
Earnings per share - basic | $ | 0.99 | $ | 1.00 | $ | 2.82 | $ | 2.79 | ||||||||
Earnings per share - diluted | $ | 0.98 | $ | 0.99 | $ | 2.79 | $ | 2.75 | ||||||||
Average shares outstanding - basic | 132.9 | 133.1 | 132.7 | 132.9 | ||||||||||||
Average shares outstanding - diluted | 134.3 | 134.8 | 134.3 | 134.7 |
Fourth Quarter Report | McCormick & Company, Incorporated | |||||||
Consolidated Balance Sheet | ||||||||
(In millions; for periods ending November 30) | ||||||||
2011 | 2010 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 53.9 | $ | 50.8 | ||||
Trade accounts receivable, net | 427.0 | 386.7 | ||||||
Inventories | 613.7 | 477.6 | ||||||
Prepaid expenses and other current assets | 128.3 | 100.8 | ||||||
Total current assets | 1,222.9 | 1,015.9 | ||||||
Property, plant and equipment, net | 523.1 | 488.0 | ||||||
Goodwill | 1,694.2 | 1,417.4 | ||||||
Intangible assets, net | 350.0 | 232.5 | ||||||
Investments and other assets | 297.6 | 265.9 | ||||||
Total assets | $ | 4,087.8 | $ | 3,419.7 | ||||
Liabilities | ||||||||
Short-term borrowings and current portion of long-term debt | $ | 222.4 | $ | 100.4 | ||||
Trade accounts payable | 366.6 | 302.7 | ||||||
Other accrued liabilities | 404.3 | 431.7 | ||||||
Total current liabilities | 993.3 | 834.8 | ||||||
Long-term debt | 1,029.7 | 779.9 | ||||||
Other long-term liabilities | 446.3 | 342.3 | ||||||
Total liabilities | 2,469.3 | 1,957.0 | ||||||
Shareholders' equity | ||||||||
Common stock | 821.9 | 756.5 | ||||||
Retained earnings | 838.8 | 700.9 | ||||||
Accumulated other comprehensive loss | (59.0 | ) | (3.7 | ) | ||||
Non-controlling interests | 16.8 | 9.0 | ||||||
Total shareholders' equity | 1,618.5 | 1,462.7 | ||||||
Total liabilities and shareholders' equity | $ | 4,087.8 | $ | 3,419.7 |
Fourth Quarter Report | McCormick & Company, Incorporated | |||||||
Consolidated Cash Flow Statement | ||||||||
(In millions; for periods ending November 30) | ||||||||
Twelve Months Ended | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 374.2 | $ | 370.2 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization | 98.3 | 95.1 | ||||||
Stock-based compensation | 13.0 | 11.9 | ||||||
Income from unconsolidated operations | (25.4 | ) | (25.5 | ) | ||||
Changes in operating assets and liabilities | (136.3 | ) | (82.2 | ) | ||||
Dividends from unconsolidated affiliates | 16.2 | 18.0 | ||||||
Net cash provided by operating activities | 340.0 | 387.5 | ||||||
Cash flows from investing activities | ||||||||
Acquisitions of businesses and joint venture interests | (441.4 | ) | (46.9 | ) | ||||
Capital expenditures | (96.7 | ) | (89.0 | ) | ||||
Proceeds from sale of property, plant and equipment | 0.6 | 6.2 | ||||||
Net cash used in investing activities | (537.5 | ) | (129.7 | ) | ||||
Cash flows from financing activities | ||||||||
Short-term borrowings, net | 216.7 | (99.6 | ) | |||||
Long-term debt borrowings | 252.0 | - | ||||||
Long-term debt repayments | (101.1 | ) | (14.4 | ) | ||||
Proceeds from exercised stock options | 58.0 | 73.6 | ||||||
Common stock acquired by purchase | (89.3 | ) | (82.5 | ) | ||||
Dividends paid | (148.5 | ) | (138.2 | ) | ||||
Net cash provided by (used in) financing activities | 187.8 | (261.1 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
12.8 | 14.6 | ||||||
Increase in cash and cash equivalents | 3.1 | 11.3 | ||||||
Cash and cash equivalents at beginning of year | 50.8 | 39.5 | ||||||
Cash and cash equivalents at end of year | $ | 53.9 | $ | 50.8 |
Source:
McCormick & Company, Incorporated
Corporate Communications:
Lori
Robinson, 410-527-6004
lori_robinson@mccormick.com
or
Investor
Relations:
Joyce Brooks, 410-771-7244
joyce_brooks@mccormick.com